Giles Capital Weekly - Week 28
Welcome to another edition of Giles Capital Weekly. As markets navigate fresh trade tensions with Trump's 30% tariffs on EU and Mexico, this week's analysis reveals compelling opportunities emerging from infrastructure modernization and demographic shifts across global markets. While the S&P 500 hovers near records and sentiment indicators flash "extreme greed," quality companies are delivering exceptional returns through structural advantages that are away the headlines, from Japan's infrastructure evolution to Spain's healthcare demographics.
My top picks for this week exemplify businesses with durable competitive moats trading at attractive entry points. examines Brookfield Corporation (BN), the alternative asset management leader positioned for secular growth in infrastructure and renewables while trading at an 18% discount despite managing over $1 trillion in assets. covers ClÃnica Baviera (CBAV.MC), the Spanish ophthalmology group generating 37% ROIC with powerful demographic tailwinds, a compelling story we previously featured as a top pick in Week 23.
Before diving into this week's newsletter…
Americas
on Brookfield Corporation (🇨🇦BN CN - CAD$104 billion) Alternative asset manager positioned for secular growth in infrastructure and renewables with $1T+ in assets under management, generating 15% historical returns on parent equity while trading at 18% discount to fair value despite secular tailwinds from green transition and digitalization.
on Micron Technology (🇺🇸MU US - US$130 billion) Memory semiconductor leader positioned for multi-bagger returns through AI-driven demand with Q3 revenue up 37% YoY to $9.3B, HBM market share targeting 20-25% by end of 2025, zero debt, and trading at attractive 10x FY26 P/E despite oligopoly positioning.
on AMD (🇺🇸AMD US - US$217 billion) Semiconductor company recovering from drawdown with strong AI chip catalysts, data center revenue up 57% YoY, improving 50% gross margins, and trading at reasonable 37x forward P/E while challenging Nvidia's dominance in AI computing markets.
on JD.com (🇺🇸JD US - US$48 billion) Deep value opportunity in Chinese e-commerce trading at compressed 8.4x forward P/E vs historical 24.5x, aggressive 6% share repurchases with 6.2% shareholder yield, yet facing macro headwinds requiring patience for turnaround execution.
on Snap Inc (🇺🇸SNAP US - US$18 billion) Social media platform showing improving fundamentals with DAUs growing to 460M, Snapchat+ hitting $600M annual run rate (+75% YoY), operating expenses improving to 20% of revenue from 31%, yet faces intense competition in digital advertising landscape.
on Uranium Energy Corp (🇺🇸UEC US - US$6 billion) Rapidly growing uranium miner set for 14x production increase from 0.2mmlbs to 2.8mmlbs by 2027, positioned to benefit from severe supply-demand imbalance with zero debt, $139M cash, and Pentagon backing in critical national security sector.
on IAC Inc (🇺🇸IAC US - US$3.2 billion) Holding company trading at 50% discount with sum-of-parts value over $6B including 23% MGM stake worth $2.4B, Dotdash Meredith targeting $350M EBITDA, and $900M+ cash providing multiple value unlock catalysts through potential spinoffs.
on Dave Inc (🇺🇸DAVE US - US$3.1 billion) Misunderstood neo-bank offering superior earned wage access product with 47% YoY revenue growth, $18 customer acquisition cost, 72% gross margins, and revolutionary flat 5% fee structure replacing traditional payday lending's 200-400% APRs.
on Topgolf Callaway Brands (🇺🇸MODG US - US$1.6 billion) Asset-backed value play trading at 8.4x EV/EBITDA vs historical 14x and 0.7x price-to-book following 65% decline from 2023 highs, presenting integration opportunities despite execution challenges in combining golf equipment and entertainment businesses.
Europe, Middle East & Africa
on ClÃnica Baviera (🇪🇸CBAV.MC ES - €1.8 billion) Leading Spanish ophthalmology group with exceptional 37% ROIC delivering 23% revenue CAGR since 2018, targeting 180 clinics by 2027 with self-funded €70-80M expansion while benefiting from aging demographics and 80% of Spaniards having visual problems.
on Supreme PLC (🇬🇧SUP.L UK - £207 million) UK consumer goods company with diversified portfolio spanning batteries, vaping, nutrition led by disciplined CEO with 51% ownership, delivering 24.4% ROIC and 20.1% five-year revenue CAGR through strategic acquisitions with 3-4 year payback periods.
on Watches of Switzerland Group (🇬🇧WOSG.L UK - £1.4 billion) Luxury watch retailer with £1.65B revenue (+7.4% growth) facing margin pressure from tariffs but positioned for long-term US expansion, trading at attractive 9.0x forward P/E vs historical 15.3x median with 13% FCF yield.
on LVMH Moët Hennessy Louis Vuitton (🇫🇷MC.PA FR - €228 billion) European luxury conglomerate positioned for rebound despite temporary headwinds with mixed Q1 results showing 4% Fashion & Leather contraction, strong brand portfolio resilience, and geographic diversification through strategic hospitality acquisitions providing long-term value.
on LVMH Moët Hennessy Louis Vuitton (🇫🇷MC.PA FR - €228 billion) An additional write-up on luxury conglomerate facing cyclical headwinds with 50% drawdown from €900 to €450 despite maintaining strong brand power, benefiting from yen weakness driving €1.6B Japan revenue shift while managing -€3.0B Asia impact.
Asia-Pacific
on Kasumigaseki Capital (🇯🇵3498.T JP - ¥139.6 billion) Diversified infrastructure platform benefiting from Japan's modernization with stunning 63% three-year revenue CAGR from ¥8.0B to ¥78.6B, transitioning from consulting to asset ownership across renewable energy, logistics, and hospitality while expanding margins from 4.1% to 14.4%.
- I Reverse-Engineered 30 Years of Berkshire's Portfolio Analysis revealing Berkshire Hathaway's systematic "conviction building" pattern where top 5 positions consistently represent 65-75% of equity portfolio, accumulated gradually over 2-3 years rather than purchased immediately, challenging conventional diversification wisdom with data-driven insights into wealth creation through concentration. (18 min read)
- The Worst Investments I've Made Comprehensive analysis of investment mistakes with asset-heavy Japanese companies that looked cheap but proved to be value traps, leading to evolved investment philosophy focusing on ROA above 5% and avoiding businesses with structural constraints despite attractive P/E ratios. (45 min read)
- Where do Tech Returns Come From? Analysis of $13 trillion in tech value creation over 30 years covering 300+ companies across 65 categories, revealing that top 7 companies account for 50% of dataset value with key insights on why anomalous companies create the most value and different sector "slugging ratios." (25 min read)
- Free-market economics is working surprisingly well
Analysis of Javier Milei's free-market reforms in Argentina showing successful inflation reduction from hyperinflation threats to 2.4% monthly rates, economic recovery after initial recession, and poverty reduction to 38.1%, challenging progressive warnings about austerity while advocating balanced mixed economies. (25 min read)- "Four Tigers" Fate Divides, Big Tech Rejoices
Analysis of China's leading AI startups showing divergent paths with Baichuan facing co-founder departures, MiniMax preparing Hong Kong IPO, Zhipu planning public listing, and Manus executing Singapore expansion, exploring whether we're in an AI bubble using four-wave technological framework. (18 min read)- Southeast Asia Market Insights: ASEAN Inc.
Conceptual framework viewing Southeast Asia as unified investment opportunity through country ETFs, with portfolio returning 7.2% since December 2024 led by Vietnam (+27.3%) and Singapore (+22.2%), while forward earnings projections show Indonesia leading at 26.1% annually despite valuation disconnects. (15 min read)- Guide to corporate governance Comprehensive framework for evaluating corporate governance across Asia-Pacific markets with eight-step scorecard including board size, ownership concentration, and compensation structures, reviewing regional improvements in Japan, South Korea, and Taiwan while noting continued challenges in China and Southeast Asia. (30 min read)
- The Deficit Closed by $250 Billion Analysis showing $250B deficit improvement over last four months versus 2024, potentially annualizing to $750B swing, challenging market narratives about unsustainable fiscal path and suggesting potential for Fed rate cuts with falling treasury yields rather than rising, with sector rotation implications. (25 min read)
Deep Value Insights- The Theory of Reflexivity Comprehensive exploration of George Soros' theory of reflexivity, challenging equilibrium assumptions in markets by explaining how perception shapes reality through cognitive and participating functions, creating feedback loops that drive boom-bust cycles with practical applications for understanding market dynamics. (45 min read)
Second quarter 2025 showed strong equity performance despite tariff volatility, with managers highlighting AI infrastructure gains, currency headwinds from dollar weakness, and value opportunities in quality businesses at historical discounts.
Mar Vista US Quality Premier: Returned +14.29% net in Q2 2025, outperforming Russell 1000 (+11.10%) and S&P 500 (+10.94%). Initiated GE Aerospace position while adding to Amazon and reducing Alphabet. Letter discusses:
Broadcom (🇺🇸AVGO US) - Existing Position: Leading custom AI ASIC provider diversifying beyond Alphabet with accelerating growth
Microsoft (🇺🇸MSFT US) - Existing Position: Strong Azure AI demand with $300 billion remaining performance obligation
Meta Platforms (🇺🇸META US) - Existing Position: 16% revenue growth year-over-year with 37% earnings per share surge
GE Aerospace (🇺🇸GE US) - New Position: Powers over 60% global narrowbody fleet with strong aftermarket business
Apple (🇺🇸AAPL US) - Existing Position: China challenges but strong ecosystem with 2 billion active devices
Right Tail Capital: Assets under management grew from $3 million to $27 million over three years. Portfolio holds approximately 70% of companies for better part of three years, reflecting low turnover approach. Letter discusses:
Portfolio maintains long-term holdings with high-quality businesses creating value through patient capital
Recent exits included Charles Schwab, IAC Communications, Charter Communications, and Boyd Group Services
Focus on finding businesses early in reinvestment lifecycle with strong competitive advantages
Fundsmith Equity Fund: Fund declined -1.9% in H1 2025, outperforming MSCI World Index by 2 percentage points. Major headwind from 9% USD depreciation against GBP. Added Zoetis, Intuit, and EssilorLuxottica while exiting PepsiCo and Brown-Forman. Letter discusses:
Philip Morris (🇺🇸PM US) - Existing Position: Largest positive contributor at +1.8% with strong pricing power
Meta Platforms (🇺🇸META US) - Existing Position: Second largest contributor at +1.4% from advertising recovery
Microsoft (🇺🇸MSFT US) - Existing Position: Third contributor at +0.8% from AI-driven Azure growth
Novo Nordisk (🇩🇰NVO US) - Existing Position: Largest detractor at -1.7% due to US regulatory challenges
EssilorLuxottica (🇫🇷EL FP) - New Position: Global eyewear manufacturer among new accumulations
East 72 Dynasty Trust: Quarterly return of +8.36% with rolling 12-month return of +24.7%. Gross return before fees of ~26.0% annually, benefiting from European currency strength. Letter discusses:
Catapult International (🇦🇺CAT AU) - Existing Position: Sports analytics technology with 210% annual return
Sportradar (🇺🇸SRAD US) - Existing Position: Sports data platform with 151% annual return
CK Hutchison (ðŸ‡ðŸ‡°0001 HK) - Featured Analysis: Conglomerate trading at 65% discount with ports divestiture catalyst
E-L Financial (🇨🇦ELF CA) - Existing Position: Insurance company with special dividend benefits
Viel et Cie (🇫🇷VIL FP) - Existing Position: Financial services firm with 55% annual return
Ennismore European Smaller Companies Fund: GBP A class gained +1.2% in June and +2.6% quarterly. Long portfolio contributed +3.2% in June while shorts detracted -1.8%. Focus on German fiscal framework changes driving small-cap interest. Letter discusses:
Costain Group (🇬🇧COST LN) - Existing Position: UK infrastructure company with nuclear opportunities driving 17% gain
Secure Trust Bank (🇬🇧STB LN) - Existing Position: Vehicle finance recovery with new CEO appointment
EVS Broadcast Equipment (🇧🇪EVS BB) - Existing Position: Top holding at 3.6% portfolio weight in broadcast technology
Whitbread (🇬🇧WTB LN) - Featured Analysis: Premier Inn operator with German expansion potential
SAF Holland (🇩🇪SFQ GR) - Existing Position: Commercial vehicle components at 3.2% portfolio weight
Thanks to Buy Side Digest (buysidedigest.com) for compiling the investment letters which are featured here.
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Disclaimer: This newsletter is for informational purposes only and not investment advice. The intro reflects my views, while investment summaries are my interpretations of original authors' analyses. Information may not be fully verified and is subject to correction. Original authors' complete views may differ. Always do your own research before making investing decisions.